Should You Use Your $1,200 Stimulus Check To Pay Off Credit Card Debt


A polarized U.S. senate united to come up with the largest stimulus package in history to counteract the negative economic effects of the coronavirus pandemic.

U.S. President Donald Trump signed the $2 trillion economic relief plan into law on March 27 to offer financial assistance to millions of Americans affected by the pandemic.


The stimulus payment will grant qualifying taxpayers a one-time payment of up to $1,200, depending on your income, and is expected to arrive by April 17.  During these uncertain times, we should use our resources wisely, and so it raises the question: What will you do once you receive the payment? Should you use your stimulus check to pay off credit card debt? Let’s look at the details.


The stimulus payment is a one-time payment where adults can expect to get a check of  $1,200. Depending on the individual’s reported income, some will get less and some will not receive a check at all. Also, an additional $500 will be given to every qualifying child age 16 or under.


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The payment you will receive will be based on your most recent tax return. A single adult with a valid Social Security number will get the full amount if he has an adjusted gross income of $75,000 or less. A total of $2,400 will be given to married couples without children if they have a combined income of $150,000 or less. Individuals filing as “head of household” can expect to receive the fund in full if they earned $112,500 or less.


If you earn more than the threshold, the payment you will receive starts to get reduced by $5 for every $100 over the threshold. The threshold is $75,000 for single adults, $112,500 for the heads of household, and $150,000 for married couples who filed their most recent tax return jointly.

However, there is a limit and not everyone will receive a check once your annual income reaches the following: $99,000 for single adults, $146,000 for the head of household with only one child, and $198,000 for married couples with no children.


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About 61% of Americans hold a credit card and cardholders have an average credit card balance of $6,194. It is tempting to utilize the stimulus check to reduce your credit card debt but if you don’t have an emergency fund and don’t have a sizable budget for essentials, then it might not be wise to put your entire check toward your debt.

The pandemic did not only bring a global medical crisis, but it also induced financial burden to all American households. Whether you got laid off at work or your working hours are reduced, everyone is equally at risk financially.

Instead of using your stimulus check to reduce credit card debt, ask your credit card issuer if they offer assistance and use the stimulus payment for essential purchases only. Simply check your card issuer’s online account management sites and mobile apps to speak or chat with one of their representatives.

Most card issuers understand your situation and are willing to help. Communicate with them and find out if you qualify for any of the relief options they offer.


However, if you have a substantial amount of emergency fund that can cover three to six months worth of expense, then it’s not a bad idea to use the stimulus check to pay off some credit card debt. If not, you may want to consider some alternative options listed below:

  1. Use a balance transfer credit card
  2. Consolidate debt with a personal loan
  3. Pay off high-interest debt
  4. Pay off the smallest balance first
  5. Borrow money from your family

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